Impact of Bankruptcy on Cayman Island & Swiss Companies

[SamChan]

I am considering suing my old boss who has hinted at bankruptcy. He is a CA resident but he owns a company in Cayman Islands which generates almost $5M a year in NI. He has a lot of real estate that is upside down in CA and he is planning on walking away from all of them (they are in LLCs - some have recourse debt).

Can he do that? Take a chapter and run away? Or are there bankruptcy treaties between the US and Cayman which would allow creditors (there are many) force him to liquidiate his Cayman Island Company? Also he has stocks in a GmbH company (swiss). Are there treaties with Switzerland also?

These companies have sent money to his US companies so directly rather than through him, so it may show they are related. In other words, if he was being careful and saw them as separate, he would withdraw funds in from one company and put it in his personal account and then take money from his personal account and put it in another. Instead, he just transfers between these "separate" companies. Don't know if this point matters.

It seems unfair that he can try and run away like that from his creditors.

Thanks.

[Flamingo]

At this point the key word in your posting is "hinted." Until the bankruptcy is actually filed, there is nothing you can do because you have no idea what will or will not be listed in that paperwork. BK's are public record; when/if it is filed you will be able to view the information and at that time if you suspect fraud, you can contact the trustee, authorities, an attorney, etc. with your concerns.

Also, if you suspect underhanded or other dealings are going on in that company now as to how things are handled, or in the past as you state it's your old boss, you can consult with a Labor Law attorney and please research the Whistleblower's Protection Act as to how it may protect you.

[SamChan]

Thanks for the reply. My concern is more about whether a bankruptcy filed in CA will allow creditors access to the swiss and cayman companies. Or are those items sheltered from BK because they are not based in the US and they seem to be friendly to businesses.

So must he include the Cayman and Swiss companies in his bk?

Thanks.

[HHM]

Strictly speaking, if a person files BK, they are to disclose ALL assets, including those held overseas. If he files BK, and does not disclose those assets, and the court finds out, they could deny his bankruptcy discharge, meaning, he will emerge from bankruptcy owing everyone the money he owes and he can never discharge the debt.

It is unlikely that someone holding off shore assets would file BK in the first place.

As to the question, could the BK court actually get at those assets...if they are properly set up, probably not (but I don't know the specifics of any treaty, but if these accounts, trusts, and LLC's are set up properly, they are beyond the jurisdiction of US courts). But as previously mentioned, if the guy were to file BK, and these assets came to light, he would be in all sorts trouble with BK fraud.